TAIPEI President-elect Ma Ying-jeou said on Tuesday he hopes to transform Taiwan from "troublemaker" to "peacemaker" internationally, outlining a series of policy steps to stimulate trade and investment with political rival China.
But Ma, in an exclusive interview with Reuters, said progress on rebuilding relations with China would be slow given the strains in cross-Strait and U.S. ties, which he described as being at an all-time low due to the "diplomatic adventurism" of incumbent President Chen Shui-bian over the past eight years.
Beijing has accused Chen of pursuing creeping independence, with one policy change after another in which he sought to strengthen the thriving democracy's diplomatic identity. China regards Taiwan as part of its sovereign territory and has threatened to attack if it declares independence.
Taiwan is recognized by just 23 mostly impoverished countries around the world compared to 170 that recognize permanent U.N. Security Council member China.
Ma on Tuesday signaled a new tack for Taiwan to defuse tensions in what is one of Asia's biggest potential flashpoints.
"We want to be a responsible stakeholder in the world, meaning that we should be a peacemaker, not a troublemaker" Ma said in his first interview with a foreign news agency at the headquarters of the Nationalist Party in Taipei following his landslide election in March.
The sensitive nature of relations made it unlikely that Ma could meet Chinese President Hu Jintao in the near term, with the rancor so deep that he saw it unlikely the two sides could agree to bring the Olympic torch to Taiwan on its route to the Beijing Olympics in August.
He described relations with China as stagnant for the past eight years under the Chen administration.
Relations with Washington have also soured, with U.S. President George W. Bush responding to Chen's initiatives to hold referenda on Taiwan independence and other contentious issues with a call for both sides not to upset the status quo.
The United States switched diplomatic recognition from Taipei to Beijing in 1979, recognizing "one China", but remains Taiwan's biggest ally and arms supplier.
"ALL TIME LOW"
Ma has applied to visit the United States in a trip to mend fences.
"The reason why I said I wanted to go to the United States is really to repair the damaged relationship. The mutual trust between Taiwan and the United States has gone down to an all-time low because of ... what I call diplomatic adventurism on the part of the current government."
Ma, 57, who will be sworn into office on May 20, said he planned to focus on swift and inexpensive policy changes that could stimulate growth and investment at home and boost trade relations with the mainland.
They included regular and direct weekend charter flights to China by July. Currently, travelers must pass through a third centre, such as Hong Kong, en route from the mainland to Taiwan, making a two to three-hour flight into an all-day affair.
Ma also said he wanted to increase Chinese tourism to the island and introduce a mechanism by year-end to make the Taiwan dollar convertible with the Chinese yuan, a policy he said would be crucial when plane-loads of mainlanders land in Taipei with pockets-full of China's yuan currency.
Taiwan would gradually lower a cap on Taiwan firms that limits them from having more than 40 percent of their net assets in China, Ma said.
That limit was designed to prevent over-reliance on the mainland, but has drawn the ire of Taiwan businesses in recent years that say it puts them at a competitive disadvantage to other companies that operate in China. Still, Taiwan businesses have invested about $100 billion in China over the past two decades.
Ma said it was time for a change.
"We could loosen the control across the board," he said of the 40 percent cap. "If you have your headquarters in Taiwan, we probably will not impose any restrictions on the amount of investments you are going to make on the Chinese mainland."
He added that he would introduce policies welcoming Chinese investment in Taiwan, especially greenfield investments in several key sectors the island is trying to promote.
Asked if he would like to attend the Olympics in Beijing, Ma said he was interested. "But I don't think at the moment I could go. Actually, the cross-Strait relations are at a very delicate moment."
(Additional reporting by Lee Chyen Yee, Rachel Lee, Fanny Liu, Faith Hung and Sheena Lee; Editing by Nick Macfie)